In order to close the credit gap in the micro, small, and medium-sized business (MSMEs) sector, the Small Industries Development Bank of India (Sidbi) has urged for sector-specific policy interventions. It has also highlighted the potential of digital lending to close the gap.
According to a survey by Sidbi, the industry has a ₹30 lakh crore credit gap, which is larger for certain groups within the sector, such as service and women-owned MSMEs.
The "Understanding Indian MSME Sector: Progress and Challenges" research notes that industries with a greater credit gap, including food processing, grocery stores, ready-made garments (RMG), and IT/ITeS, require interventions tailored to their needs.
For the report, it is high-profile significance a comprehensive survey of 2,097 MSMEs spanning 19 diverse sectors in manufacturing, services, and trading was conducted by Sidbi to gather detailed insights.
The report highlights that micro enterprises rely significantly more on informal borrowing, with 12% using such sources, in contrast to just 3% and 2% for small and medium enterprises. It States that although 90% of the survey respondents have reported accepting digital payment, only 18% have taken advantage of digital lending. Formalization still poses a challenge," with 35% of respondents remaining unregistered, reflecting lack of awareness and fear of scrutiny", the report said.
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